OFF THE CHARTS

Oil supply rising, but demand may more than keep pace

Published: Saturday, November 24, 2012 at 4:36 p.m.

Last Modified: Saturday, November 24, 2012 at 4:36 p.m.

It used to be taken for granted that as economies grew, they would use more oil. That was a major reason cited in warnings that the world would run out of oil, particularly if standards of living rose in developing countries.

Well, standards of living are improving in developing countries, but the dire forecasts now appear to be wrong. In part that is because new discoveries and improving technologies have increased the amount of oil that can be produced. It also reflects conservation, in part, as cars become more efficient and as other steps are taken to reduce oil use.

The International Energy Agency, in its 2012 World Energy Outlook, released last week, forecast that U.S. oil production, which began to rise in 2009 after decades of decline, would continue rising through at least 2020, when it could be about as high as it was in 1970, the year of peak production.

At the same time it forecast that by 2035, U.S. oil consumption, which peaked in 2005, could decline to levels not seen since the 1960s, depending on how much conservation is encouraged.

The IEA report also forecast that by around 2020, the United States could surpass Saudi Arabia as the world's largest oil producer, and that while the country was not likely to become a net exporter of oil, the North American continent as a whole could be by around 2030.

But despite declining demand in some countries that historically were heavy users of oil, the world demand for oil seems likely to continue to rise. The IEA forecast that global energy demand – including demand for energy produced by other sources – is likely to rise by 35 percent by 2035, with a large part of the increase coming from China and India.

In 1969, the United States consumed a third of the oil used in the world, while China used less than 1 percent. Last year the U.S. share was less than 22 percent, while the Chinese accounted for 11 percent. The IEA forecasts that by 2030, the U.S. share could be less than the Chinese one.

By 2035, U.S. consumption of oil is expected to be as much as one-third less than it was last year. In China, oil consumption is expected to be up as much as two-thirds from the 2011 level, and India's is predicted to more than double.

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